Student Loan Debt Is a US Problem

October 23, 2018 5:15 am Published by Leave your thoughts

THE ACCEPTANCE LETTER

When I received my acceptance letter from Baylor, it was one of the most joyous days of my life. I got into the school of my dreams but had no concept of the cost of school. My family had no savings for college. In my ignorant bliss, I supposed the details would magically resolve themselves. I had, after all, been accepted to a top university in the state and was the first person in my family to accepted into a four-year degree program.

MY WAKE-UP CALL

I had some grant and scholarship dollars, but I mainly financed my undergrad education through debt. The irony of not being legally old enough to drink, but I could make decisions regarding 10s of 1000s of dollars of federal and state financed debt at barely 20 years old. It doesn’t seem logical or fair, not even for a moment. But, getting into debt was all I knew because that was what I got offered to keep in school. My whole existence hinged on getting that entire college immersion experience and I was not willing “risk” going to junior college for my elective credits. My undergrad degree wasn’t in business and armed with a liberal arts BA didn’t help me to negotiate a higher salary when I applied for jobs.

EDUCATION IN EUROPE

It wasn’t until I traveled to Spain to study that I learned that student loan debt in Europe is rare. Quality education is affordable whatever your household income is. Further, costs to attend professional schools isn’t an excessive amount of money. Though I graduated with an MBA years ago, college indebtedness is not only a trend that has continued but one that has increased. Tuition costs have gone up alongside interest rates on loans. A recent Bloomberg article warned students to be aware that your loan servicer does not hold the dream you do and will not necessarily offer you loan products, terms, or amounts that are in your best interest. Bloomberg National student loan debt has reached 1.5 billion. Many graduates are not earning enough in their careers to pay for them, resulting in record numbers of defaults. The number of borrowers and the amount of debt is garnering the attention of strategists that are wondering if student debt will affect spending habits of enough individuals drag on the economy. Either way, it is an unfortunate scenario where ROIs for millions is low or none.

MAKING PAYMENTS

My rule of thumb is, if you ultimately sign for 6-figures in student loan debt, you also need to earn 6-figures to make the payments, afford an apartment, household expenses, and save for retirement. Students are working and still pilling on debt because even state tuition costs have increased. For-profit consumer debt had hurt thousands whose degrees were either left uncompleted or worthless when a school closed. School debt should not be a high-pressure situation. If so, then it’s time to step back and think through your options. Lenders are in the business of lending capital not making dreams.

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This post was written by Daniel Jones

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